02.14.06

Three-Quarters of Senate Votes to Make Cantwell Sales Tax Deduction Permanent

WASHINGTON, DC – Tuesday, U.S. Senator Maria Cantwell (D-WA) applauded the Senate’s approval of a motion calling for a permanent state sales tax deduction. Tuesday’s 75-25 vote puts a supermajority of senators on record in support of making the deduction permanent. Earlier this year, the Senate approved a two-year extension of the deduction, previously set to expire at the end of the 2005 tax season.

“75 senators support tax fairness for all Washingtonians,” said Cantwell. “Without this deduction, Washingtonians get taxed twice—once when they make a purchase and again when they file their federal taxes. This tax cut is an important boost for our economy and it’s time we made it permanent. I’ll continue fighting to puts hard earned-cash back into the wallets of working families all across our state.”

In most states, taxpayers can deduct state income tax from their total income taxed by the federal government. However, residents of states with a higher sales tax in place of state income taxes have not been allowed a sales tax deduction since changes to the tax code were made in 1986. In 2004, Cantwell worked with a bipartisan group of senators and representatives to pass legislation allowing Washington state residents to deduct state and local sales taxes from their annual federal income tax returns. That deduction is set to expire at the end of the 2005 tax season.

Members of the House and Senate are currently meeting in a conference committee to work out differences between House and Senate versions of the pending Tax Reconciliation bill, which calls for an extension of the sales tax deduction through 2007. Tuesday’s Senate action instructs the conference committee considering the Tax Reconciliation bill to replace the extension with a provision making the deduction permanent. Both the House and the Senate must then pass the final version of the bill before it can take effect.

In 2004, the tax cut saved Washingtonians over $500 million, with almost 850,000 taxpayers taking advantage of the deduction. The Washington State Economic and Revenue Forecast Council estimated that during 2004 and 2005, the deduction would help create 3,000 jobs and produce hundreds of millions of dollars in economic stimulus.

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